The Flood Insurance Guru Podcast Episode 17: FHA Push Back on Private Flood Insurance

In today's episode, we'll cover the Federal Housing Administration (FHA) pushing back on Private Flood Insurance. We'll cover what this update means for those taking federal government loans, how this can affect your mortgage and your flood insurance options.

First, we have to cover what happened recently when it comes to the changes in flood insurance. At the time of writing, originally before July 1st, 2019, homeowners who have loans with the government like the FHA, VA, or SBA can only get their flood insurance policy through the National Flood Insurance Program (NFIP) and the Federal Emergency Management Agency (FEMA). The only time you can through private flood insurance is through conventional loans.

This changed when the Federal Deposit Insurance Corporation (FDIC) passed a law that allows people to enjoy flood insurance coverage and services from private flood insurance with these government-backed loans. This was very helpful for first-time homebuyers since you'd usually get your funds through these loans, and generally can help you avoid financial hardship early on. However, the FHA pushed back and is currently only accepting policies that will come from the National Flood Insurance Program (NFIP).

Now, at the time of writing, they're still trying to make a ruling to change this considering that other government loans like VA and SBA already provided green light on private flood with the FDIC's law. Now, if you're doing an FHA loan in a high-risk flood zone, well you have to go through the NFIP first in order to get insurance.

What you can do in this situation is to check if that property currently has an existing policy, so that you can do a policy transfer and policy assumption instead. This can really be helpful since you get to lock in that existing policy's rate and flood zone.

Now, things can still change with regards to this, but we believe it's best that you're well-aware of these changes. So, if you have questions if you have an FHA loan and want to see what you can do about it, if you want the flood insurance requirement removed for a property you bought, different flood insurers that can provide insurance for you, flood insurance rate maps changes or anything at all about flood, please click our links below to reach out.

Remember, we have an educational background in flood mitigation. We want to help you understand flood insurance coverage and availability so that you too can preserve your property long term and protect it from all future flood risks.